Facebook’s Q3 Maintains Mobile Ad Growth, Sees Drop In Teen Users

Facebook reported its third quarter financials today, which included continuing growth in ad revenue, particularly its mobile ads. The company pulled in $2 billion in total revenue for the third quarter, a 60% increase from $1.3 billion in Q3 2012. Its ad revenue was $1.8 billion, a 66% increase from the same quarter last year. Mobile ads made up approximately 49% of Facebook’s Q3 revenue, up from 41% in the previous quarter.

During the quarter, Facebook expanded its popular mobile app install advertisements to include engagement ads that encourage users to continue using the apps they’ve already downloaded. The company also rolled out updates to its Custom Audiences tool, including the ability to target ads at people who have visited your website or mobile app as well as Custom Audiences tool specifically designed for SMBs.

Facebook also launched its Graph Search tool this quarter, which CEO Mark Zuckerberg said was part of the company’s long-term plan to turn the social network into an information source.

“Right now the Facebook experience is push-based, but over time, if we do a good job, we should be able to create value using the knowledge that’s being shared [on the network]. That’s the direction we’re starting to go with Graph Search,” Zuckerberg said during the earnings call.

As for video ads, Zuckerberg said he was pleased with the results from video ads on Instagram, but the company is continuing to work on the video ad units that will eventually be made available on the News Feed.

Also during the call, COO Sheryl Sandberg cited comScore data showing that Facebook and Instagram account for one out of every five minutes Americans spend on the mobile web. This represents a bigger share of people's time spent on YouTube, Twitter, AOL, Tumblr, LinkedIn, Snapchat, Pandora, AOL and Yahoo combined, she claimed.

More people use Facebook on a daily basis. There were 728 million daily active users (DAUs) on average for September this year, a 25% increase from September 2012. Monthly active users (MAUs) were 1.19 billion as of September 30, 2013, an 18% increase from the same period last year.

There were 874 million mobile MAUs as of September 30, 2013, an increase of 45% year over year. Mobile DAUs were 507 million on average for September 2013.

CFO David Ebersman revealed however, that young people are leaving Facebook. The company’s estimates show that while overall US teen usage was stable from Q2 to Q3, there was a decrease in daily users.

The finding was of “questionable statistical significance,” Ebersman said, given the “lack of precision of our age estimates for younger users, but we wanted to share this with you since we get a lot of questions about it.”